Prospectus Summary
ECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before deciding to invest in our common stock. You should read the entire prospectus carefully, including “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and notes to those consolidated financial statements before making an investment decision. Some of the statements in this prospectus constitute forward-looking statements. For more information, see “Special Note Regarding Forward-Looking Statements.”TINTRI, INC.
Company Overview
Our mission is to provide large organizations and cloud service providers with an enterprise cloud platform that offers public cloud capabilities inside their own data centers and that can also connect to public cloud services.
Our highly-differentiated and extensible enterprise cloud platform combines cloud management software, web services and a range of all-flash storage systems. Our enterprise cloud platform not only delivers many of the benefits of public cloud infrastructure, but also gives organizations the control and functionality they need to run both enterprise and cloud-native applications in their own private cloud. Organizations use our platform as a foundation for their own private clouds—to build agile development environments and run mission-critical enterprise applications. We enable users to guarantee the performance of their organization’s applications, automate common IT tasks to reduce operating expenses, troubleshoot across compute, storage and network, predict their organization’s needs to scale and provide needed elasticity on demand. Our enterprise cloud platform enables organizations to easily scale to support tens of thousands of virtual machines on a single system across multiple hypervisors and containers. Our solution helps our customers optimize infrastructure by significantly simplifying deployment and operations, which can lead to substantial reductions in capital expenditures and operating expenses.
Our enterprise cloud platform is based on the Tintri CONNECT web services architecture, which has similar design characteristics as public cloud architecture—using web services that are easy to assemble, integrate, tear down, reconfigure, and connect to other services. Our CONNECT architecture uses a building-block approach that is predicated on REST application programming interfaces, or APIs, and virtual machine, or VM, and container level abstraction. REST APIs are needed to write automation scripts and connect to other elements of infrastructure, and make it possible for web services to be combined and to communicate with other services effectively. Through a comprehensive set of proprietary software tool kits and plugins, we enable users to develop customized workflows and to automate their operations. Our CONNECT architecture is based on our virtualization-aware file system that allows an organization to view, manage and analyze application performance and quality of service, or QoS. CONNECT integrates with all major virtualization architectures, including those offered by VMware, Microsoft, Citrix, Red Hat and OpenStack, and can connect with public cloud service providers. Our platform addresses a large variety of use cases, including server virtualization, virtual desktop infrastructure, or VDI, disaster recovery and data protection, and development operations, or DevOps.
We were founded in June 2008 and introduced our first products in March 2011. We focus on large private and public sector organizations and cloud service providers, or CSPs. As of January 31, 2017, we had more than 1,250 customers, including seven of the top 15 Fortune 100 companies and 21 of the Fortune 100 companies, which span a diverse set of industry verticals, such as education, financial services and insurance, healthcare, manufacturing and technology. Many of our customers continue to purchase from us on an ongoing basis. We define our customers as the end-users who have purchased one or more of our products. Our top 25 customers (as measured by their cumulative orders through January 31, 2017) that have been our customers for at least twelve months have on average cumulatively ordered more than 19x the amount they ordered from us in their first quarter as a customer. We plan to continue to focus on acquiring customers and maximizing their lifetime value through our demonstrated land-and-expand strategy.
We have experienced significant revenue growth, with revenue increasing from $49.8 million in fiscal 2015 to $86.0 million in fiscal 2016 and to $125.1 million in fiscal 2017, representing year-over-year growth of 73% and 45%, respectively, for our two most recent fiscal years. Our net loss was $69.7 million, $101.0 million, and $105.8 million in fiscal 2015, 2016, and 2017 respectively. We have funded our activities primarily through debt and equity financings. As of January 31, 2017, we had an accumulated deficit of approximately $338.7 million.
Industry Background
Cloud technologies are changing how organizations deploy, manage and support the applications that are critical to running their businesses.
Adoption of Private and Public Cloud Solutions to Address Diverse Application Requirements
The conventional IT model, which has been constrained by siloed, costly and inflexible infrastructure, is giving way to cloud architectures that are designed to serve business applications with increased agility, productivity and cost-efficiency. Enterprises are seeking to deploy cloud technologies through either public clouds or private clouds, which includes both on-premise and hosted options.
Many organizations also have realized that while public cloud delivers many benefits, it is not the right solution for all problems. Moving applications to public cloud platforms can result in significant migration cost and effort, requiring applications to be recoded, reconfigured, refactored, and reintegrated. In addition, while public cloud infrastructure is able to scale applications with fluctuating demand, the unexpected cost from unpredictable data growth or the cost of a large scale cloud deployment can quickly get out of control. Private clouds provide many of the benefits of public clouds, such as resource pooling, rapid scaling, automation and self-service, but with superior security, control and flexibility for the organization’s applications. Private clouds give organizations more control over access and usage of their applications, making private clouds ideal for larger businesses or those with strict data, regulatory and governance obligations. Unlike public-cloud solutions, private clouds can satisfy the needs of both enterprise and cloud-native applications. Many companies now utilize a combination of public clouds and private clouds.
In recent years, businesses have significantly increased their use of virtualization and containers to achieve greater infrastructure cost-efficiencies and scale. IDC estimates that by the end of 2020, virtualized instances would represent over 90% of the instances deployed globally. IDC’s CloudView Survey respondents expect their IT budget for the private cloud to grow 51.5% from 2016 to 2018. Many companies now utilize a combination of public clouds and private clouds. A recent IDC report predicted that more than 85% of enterprise IT organizations will commit to multicloud architectures encompassing a mix of public cloud services, private clouds and hosted clouds by 2018.
Emergence of Enterprise Cloud
The compelling benefits of private cloud and the desire to have access to public cloud give rise to what is generally referred to as an enterprise cloud, which is a cloud infrastructure deployed in an organization’s own data center with connections to public cloud services. An enterprise cloud possesses many of the same benefits and capabilities as public cloud, including autonomous services, automation, self-service and analytics, with added control, security, and support for enterprise applications that only a private cloud can provide. The National Institute of Standards and Technology definition lists five essential characteristics of cloud computing—on-demand self-service, broad network access, resource pooling, rapid elasticity or expansion and measured services, which are the key attributes of the functionality offered by enterprise cloud. With this functionality, an enterprise cloud solution can deliver many of the benefits of public cloud and can achieve the desired functionality, scalability and efficiency that organizations need.
Limitations of Conventional Data Center Infrastructure
While private cloud can deliver many of the benefits of public cloud, we believe that organizations have difficulty deploying an enterprise cloud platform built using conventional architectures. While many infrastructure components, including server, network and security, have evolved to support virtualized infrastructure and migration to the cloud, innovation in storage has lagged and lacked granular level operation at the VM and container level. As a result, organizations that have deployed next-generation servers, networking and security infrastructure have found it significantly more time-consuming and complex to manage, diagnose and fix performance issues with their conventional storage.
The industry has attempted to bridge the gap between conventional and cloud architecture through hyperconverged infrastructure, or HCI. We believe enterprise customers require the ability to support tens of thousands of VMs, which HCI solutions struggle to achieve. Additionally, it can be harder to independently scale resources with HCI systems. Because of these limitations, HCI systems do not meet many of the requirements of an enterprise cloud platform.
Requirements of an Enterprise Cloud Platform
An enterprise cloud platform combines cloud management with storage to simplify the management and operation of enterprise or cloud-native applications. We believe the requirements of an enterprise cloud platform are:
Our Solution
Our highly differentiated and extensible enterprise cloud platform combines cloud management software and a range of all-flash storage systems. Organizations use our platform as a foundation for their own private clouds—to build and run agile development environments for cloud-native applications and mission-critical enterprise applications.
Our enterprise cloud platform is based on the Tintri CONNECT web services architecture, which is designed using a building-block approach predicated on REST APIs and VM and container level abstraction.
Through a comprehensive set of proprietary software tool kits and plugins, we enable customers to develop customized workflows and to automate their operations. Our platform addresses a large variety of use cases, including DevOps, disaster recovery and data protection, server virtualization and desktop virtualization.
Tintri’s enterprise cloud platform addresses the requirements of the modern data center, especially in large and complex environments across multiple hypervisors. By creating an architecture fully aligned with virtualized applications, our enterprise cloud solutions provide the following benefits to our customers.
We believe that our highly differentiated solution delivers compelling value for virtualized organizations over conventional data center architectures.
Market Opportunity
Our enterprise cloud platform solution and software products address the key enterprise cloud requirements, and deliver them through a mix of on-premises storage hardware, value-added storage software and SaaS-based software services for virtualized environments. We participate in the global virtualized x86 storage systems market, which according to IDC is expected to grow from $25.7 billion in 2017 to $27.0 billion in 2018, and the virtualized x86 storage software market, which according to IDC is expected to grow from $9.5 billion in 2017 to $10.4 billion in 2018.
To address the global virtualized x86 storage systems and software market opportunity, which according to IDC is expected to be $37.4 billion in 2018, Tintri taps into the following demand drivers:
Our enterprise cloud solutions allow us to capture spend from the following markets (some of which may overlap with the above listed storage systems and software market segments), which have an estimated combined spend of $27.2 billion in 2018, according to IDC:
Our Competitive Strengths
We believe we have competitive strengths that will enable us to maintain and expand our position in the enterprise cloud market, including:
Our Growth Strategy
We intend to extend our position as a leader in providing enterprise cloud solutions to large organizations and CSPs. Key elements of our growth strategy include:
Risks Associated with Our Business
Our business is subject to numerous risks and uncertainties, including those highlighted in “Risk Factors” immediately following this Prospectus Summary. These risks include, but are not limited to, the following:
Corporate Information
We were incorporated in Delaware in June 2008. Our principal executive offices are located at 303 Ravendale Drive, Mountain View, CA 94043. Our telephone number at that location is (650) 810-8200. Our website address is www.tintri.com. Information on our website is not part of this prospectus and should not be relied upon in determining whether to make an investment decision.
The Tintri design logo and the marks “Tintri,” “VMstore,” “Tintri OS,” “Tintri Global Center,” “ReplicateVM,” “SecureVM,” “SyncVM” and “VM Scale-out” are the property of Tintri. This prospectus contains additional trade names, trademarks and service marks of other companies. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies including, but not limited to:
We have elected to include reduced disclosure of financial information and reduced disclosure regarding executive compensation in this prospectus. In addition, we have irrevocably elected not to avail ourselves of the exemption allowing for delayed adoption of new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Other than with respect to our election regarding the timing of the adoption of the new accounting standards, we may choose to take advantage of one or more of these exemptions in the future.
We will remain an emerging growth company until the earliest to occur of: the last day of the fiscal year in which we have more than $1.0 billion in annual revenue; the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; the issuance, in any three-year period, by us of more than $1.0 billion in non-convertible debt securities; and the last day of the fiscal year ending after the fifth anniversary of our initial public offering.